Old model, new problem: when should you update a model and what happens when you do?
This paper is a summary of some of the considerations involved in applying an existing model to a new problem, in particular in deciding whether to update or not, and some of the issues involved in interpreting the output from the new application. Thus where you start from does influence where you end up. Both change in total surplus and to a lesser extent the distribution of this change in total surplus across sectors, depends on the price and quantity data which is used to define the initial equilibrium, even if elasticity values are the same. So careful consideration should be given to whether an existing model should be updated because updating a model does matter. The final point to restate is that consumers of pig meat end up being the winners from either cost saving technology at the farm level or new product development or advertising campaigns at the retail level. Even for new technology implemented at the farm level, producers only receive about 20 per cent of the total benefits. These issues are discussed in detail in Mounter et al. (2005a, 2005b). Therefore in relation to the new problem outlined above, we now have a modelling framework available for the task that has been tested in a number of different ways and that now reflects current industry structure and size. It should be a more appropriate framework than the original that was described in the papers by Mounter et al. (2004, 2005a, 2005b).
References listed on IDEAS
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- Chung, Kit C. & Griffith, Garry R., 2009. "Another look at market power in the Australian fresh meat industries," Australasian Agribusiness Review, University of Melbourne, Melbourne School of Land and Environment, vol. 17.
- Zhao, Xueyan & Griffith, Garry R. & Mullen, John D., 2000. "Returns to New Technologies in the Australian Beef Industry: On-farm Research versus Off-farm Research," 2000 Conference (44th), January 23-25, 2000, Sydney, Australia 123749, Australian Agricultural and Resource Economics Society.
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